Global geopolitical tensions and economic slowdowns are reminding the corporate world of an important lesson: “Cash is king.”

The era of low interest rates post the 2008 crisis – when central banks worldwide reduced rates to record lows to stimulate growth – got businesses used to debt, and fuelled startups growing rapidly on borrowed money. But as interest rates climb back up, companies are seeing the benefits of having surplus cash on the balance sheet. 

There is, of course, a balance between too little cash and too much. Very high cash reserves suggest that investment opportunities are being missed or are not available. Excess undeployed cash is also vulnerable to inflation, which erodes its real value over time.

In FY25, the cash reserves of Nifty 500 companies grew 17% to Rs 17.5 lakh crore, supported by healthy operating margins alongside modest growth in capital expenditure.

Among sectors, the IT consulting & software industry led with cash reserves of Rs 1.17 lakh crore, followed closely by the automobile and auto ancillary sector at Rs 1.15 lakh crore. Metals and mining firms collectively held Rs 1.1 lakh crore, and engineering companies had over Rs 73,000 crore. 

Bhavesh Shah, Head of Investment Banking at Equirus, says, “The Covid pandemic triggered a realisation among corporates to maintain higher liquidity for unforeseen challenges. Simultaneously, consumer behaviour, including post-pandemic revenge buying, boosted company performance and added to cash reserves.” 

In this edition of Chart of the Week, we analyse the stocks with the highest and lowest cash reserves and the reasons for the same.

Strong financial positions, steady profits and diversified businesses have enabled companies such as Reliance Industries in the oil and gas sector, Tata Motors in automobiles and auto components, Infosys in software and services, and Larsen & Toubro in the cement and construction sector to maintain high cash reserves.

On the other hand, when it comes to companies with low cash reserves, sectors such as food, beverages, and tobacco, pharmaceuticals and biotechnology, and chemicals and petrochemicals feature in the list. Some companies with low cash reserves include Balrampur Chini, Concord Biotech and Clean Science and Technology, mainly due to high spending on expansion and dividend payments.

Reliance Industries tops cash reserves to fuel expansion and green energy push

Reliance Industries holds the highest cash reserves among Indian companies. In FY25, it reported Rs 1.06 lakh crore in cash reserves, representing a 45.2% CAGR over the five years. 

Reliance generates strong cash flows from its retail and telecom businesses, which now contribute more than half of its consolidated EBITDA. Sanjay Mookim, an analyst at JPMorgan, says, “Back in FY17, a staggering 96% of Reliance’s EBITDA came from its core energy operations. Fast forward to FY25, consumer verticals have taken centre stage.”

For FY26, Reliance plans to invest Rs 75,000 crore through internal accruals and external borrowings for its new energy business, including the development of a 20 gigawatt (GW) solar photovoltaic (PV) manufacturing plant, expansion of retail stores, and a petrochemical expansion. 

Auto and IT strengthen their cash reserves to accelerate EV and AI investments

The growing adoption of electric vehicles (EVs) and rising demand for artificial intelligence (AI) are prompting automobile and software companies to strengthen their cash reserves to fund shifting market needs. 

Tata Motors holds the highest cash reserves in the automobile and auto components sector at Rs 40,834 crore, driven by a profit CAGR of 239% over the past two years. In FY25, Tata Motors repaid its Jaguar Land Rover (JLR) debt, earned higher earnings from increased sales of premium models, and benefited from better pricing. The company earns 70% of its revenue from the JLR business.

Despite its strong financial position, Tata Motors’ sales declined in recent months due to weak demand in both passenger and commercial vehicles, increased competition, macro headwinds, and the expiration of government subsidies such as the FAME scheme.

For FY26, Tata Motors plans to invest £3.8 billion (Rs 40,000 crore) in JLR’s electric vehicle manufacturing facilities in the United Kingdom (UK). In India, the company plans to invest Rs 33,000-35,000 crore by FY30, primarily through internal accruals, to launch new electric vehicle models and upgrade its passenger vehicle manufacturing facilities.

Ashok Leyland holds cash reserves of Rs 7,263.4 crore as of FY25. The company transitioned to a net cash surplus of Rs 4,242 crore from a net debt of Rs 89 crore in FY24, helped by improved margins resulting from lower raw material costs, a more favourable product mix, and higher sales.

K.M. Balaji, CFO, says, “In FY26, we plan to invest Rs 1,000 crore in product development for switch mobility (EV division) and expansion of Hinduja Leyland Finance, using internal accruals.”

Infosys leads the software and services sector with cash reserves of Rs 24,455 crore, supported by higher operating cash flow and better working capital management.

It consistently returned cash to shareholders through dividends and buybacks, raising its dividends at a 16% CAGR over five years to Rs 20,289 crore in FY25.

HCL Technologies holds Rs 21,289 crore in cash reserves in FY25, supported by strong operating cash flows of Rs 22,261 crore and lower acquisition spending of Rs 2,032 crore. New deals in AI and engineering research and development (R&D) services have boosted revenue growth, and high-margin businesses, such as the software segment, have helped the company grow its cash reserves.

C. Vijayakumar, CEO, says, “In FY26 and beyond, cash reserves will fund AI, generative AI, and acquisitions to strengthen market presence.” He also highlights the Rs 77,000 crore order pipeline for FY25 and steady cash reserves that support the company’s FY26 revenue growth target of 2% to 5%.

Cyclical sectors maintain high cash reserves to navigate market volatility

Cyclical sectors including cement and construction, utilities, and metals and mining, are vulnerable to market volatility, compelling companies to maintain substantial cash reserves as a cushion.

Engineering giant Larsen & Toubro (L&T), which operates in the cement and construction sector, had cash reserves of Rs 22,965 crore at the end of FY25, a 49.5% increase from the previous year. 

L&T’s net profit rose 15.1% to Rs 15,037 crore in FY25, on the back of a 15.3% increase in revenue, which reached Rs 2.5 lakh crore. The company reported a strong order book of Rs 5.7 lakh crore. 

R. Shankar Raman, CFO, says, “We expect order inflows and revenues to grow by 10% and 15%, respectively, in FY26. We aim for margins of 8.3% in the projects and manufacturing portfolio and plan to build three semiconductor fabrication facilities in India over the next five to ten years, with potential investments of over Rs 1 lakh crore.”

Grasim Industries, the flagship company of the Aditya Birla Group, held cash reserves of Rs 7,905 crore as of FY25, a 70% increase from the previous year. Strong revenue and dividend inflows from its core businesses—cement (UltraTech Cement), chemicals, and financial services (Aditya Birla Capital)—drove this growth.

In utilities, Tata Power leads with cash reserves of Rs 11,751 crore, supported by higher revenue from improved billing and collections from distribution companies, lower finance costs, and reduced capital expenditure in FY25.

CEO Praveer Sinha notes, “For FY26, we have planned an investment of Rs 25,000 crore, with 50% allocated to renewables, 20% to power generation, and 30% to transmission and distribution, funded through internal accruals and debt.”

In the metals and mining sector, Coal India holds cash reserves of Rs 34,215 crore in FY25, helped by higher coal production, strong demand, and increased e-auction premiums. 

Pharma, food, and beverage sectors face a cash crunch amid huge investments

Large investments have left stocks in the pharmaceutical and biotechnology sector, as well as in food, beverages, and tobacco, with the lowest cash reserves in FY25.

Concord Biotech holds the lowest cash reserves in the pharmaceutical and biotechnology sector, with Rs 1.2 crore as of FY25. Its stock has risen 17.08% over the past year. The company invested Rs 160 crore to upgrade its manufacturing facilities, bringing down its cash reserves from Rs 47 crore in the previous year.

Balrampur Chini holds the lowest cash reserves in the food, beverages, and tobacco sector, at Rs 3.4 crore in FY25, following an investment of Rs 880.4 crore in the Polylactic Acid (PLA) project. It funded the project through internal accruals and debt, which reduced its reserves.

Godfrey Phillips' cash reserves declined to Rs 30.3 crore in FY25 due to higher spending on fixed assets and a 43.7% dividend payout.

BEML, a manufacturer of heavy-duty trucks and trailers, held Rs 5 crore in cash reserves in FY25, down from Rs 39.3 crore in FY23. This was due to increased spending on fixed assets and higher working capital needs. Despite lower cash flow, BEML paid Rs 85 crore in dividends in FY25, further decreasing its cash reserves.